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Bankable land could reignite Zimbabwe economy

by Staff reporter
28 Jun 2020 at 07:58hrs | Views
THE solution to Zimbabwe's unending economic problems is the provision of bankable land rights, which will spur farming as real business, a renowned economist has said.

John Robertson said at a time when too many governments are fixated on urban growth and agricultural consolidation, Zimbabwe could relieve itself of the heavy unprofitable command agriculture and state-subsidised approach giving way to self-sustained farming anchored on bankable title deeds.

In that approach, farmers will get bank loans for their businesses, and that has seen 108 of the world's best economies thrive.

Lands, Agriculture and Resettlement minister Perence Shiri did not respond to questions sent to him a fortnight ago.

Finance and Economic Development minister Mthuli Ncube, however, agreed the approach was prudent, but said it was not directly under his ministry.

"Well, of course, it's not our ministry which deals with land issues, but I am aware of the issues you are raising," Ncube said.

"Government has moved strides to bolster production just like in the winter wheat programme to be repeated in summer.

"We have been able to crowd banks to fund the projects.

"We have the 99-year leases in place and they give some form of title although banks say these are not homely, so we need to finetune them.

"We must also accept we are in a transition and once banks are more comfortable, government will pull back.

"But be that as it may, some banks have pegged their interests rates to cushion themselves against risk."

Robertson believes government needs to move fast.

"Since the publication of the land confiscation policies in 1997, the country has experienced a growing dependence on imports, the virtual disappearance of formal employment creation and, for government, the rapid evaporation of tax revenues. Subsequently, investment inflows were reduced to a mere trickle by the 2010 policy decision that made compulsory the surrender of 51% of the shares in every company owned by non-indigenous people," he said.

"These are all self-inflicted disabilities and to start a recovery phase, the first step required will be the restoration of property rights.

"As of now, the government has held to its belief that such a step is politically impossible.

"However, the entire population has, by now, received all the evidence it needs that without market value, land is disabled.

"Accordingly, the people on that land are also disabled.

"At its core, the damage done to property rights resulted in the whole country being disabled.

"The liquidity problem is just one of these disabilities, and it stems directly from the cancellation of the collateral value of billions of dollars-worth of agricultural land.

Robertson said a process that would quick-start the possible turn-around for the country could be launched by a declaration that all land is to be placed onto the market and anyone who wants a piece will have to make arrangements to pay for it.

"However, if the conditions now in place are kept in place, all the severe limitations will also stay in place," he added.

"Business opportunities will no doubt continue to materialise, but the kind of businesspeople who accept these constraints will be nothing like the kind of investor that could have met the country's deeper recovery and growth requirements."

Robertson said President Emmerson Mnangagwa had to wave off opportunists, most within his ruling party, who have fewer reservations about the need to acquire licences, permits, project approvals, registration certificates and indigenisation compliance certificates, often because they seek only short-term gains and plan to disappear as soon as these gains have been made.

Such investors are also more likely to find out who they have to bribe to make the returns they want.

However, many of the investors who could make the much more meaningful long-term commitments needed to restore growth have been here all along.

The right policy changes would soon engage them and many more would soon arrive if Zimbabwe made the right moves to welcome them, said Robertson.

"Government believes that property rights are empowering. That turns out to be a problem," Robertson said.

"Government believes that power acquired or granted to the population would be at the expense of the power wielded by government.

"Therefore, people should not be empowered at all.

"Government should be happy to offer empowering policies, but should avoid keeping the promises."

He said government should not see successful foreign investors as dilution of government's authority, but as partners whose licencing should be facilitated to promote local production and beneficiation envisaged to create employment.

He said 5 000 commercial farmers were able to feed the country and have surplus, which could feed international markets.

Commercial farmers, who could become highly productive after a few years of careful investment, would need constitutionally protected property rights and security of tenure required for longterm decision-making.

"Five-thousand commercial farmers used to farm half the country," he said.

"Communal farmers could be converted into commercial farmers if they are granted property rights.

"After some years, their numbers would decrease because of take-overs and consolidations that would generate economies of scale.

"In less than 20 years, the areas under current communal occupation could become highly productive capital-intensive commercial farms with large labour forces.

"Restoring the collateral value of land would help to rebuild the entire banking sector.

"At present, it is crippled by the lack of security and the lack of confidence caused by government policy choices," Robertson added.

Another researcher said government could use money invested in command agriculture for services in the marginalised communal areas for infrastructure when farmers turn commercial.

History has shown, and research supports, that smallholders can, in a wide range of settings and with the right support from national governments, not only substantially increase their agricultural productivity, but also power broad economic growth growing the economy and a better future for themselves and their country.

Source - The Standard